Prostar Wireless Grp., LLC v. Domino's Pizza, Inc., Case No. 3:16-cv-05399-WHO

• Decision Date: 28 December 2018
• Docket Number: Case No. 3:16-cv-05399-WHO
• Court: U.S. District Court — Northern District of California
• Parties: PROSTAR WIRELESS GROUP, LLC, Plaintiff, v. DOMINO'S PIZZA, INC., Defendant.

360 F.Supp.3d 994

PROSTAR WIRELESS GROUP, LLC, Plaintiff,

v.DOMINO'S PIZZA, INC., Defendant.

Case No. 3:16-cv-05399-WHO

United States District Court, N.D. California.

Signed December 28, 2018

Darius C. Ogloza, David Christopher Fortney, Ogloza Fortney LLP, San Francisco, CA, Micah David Nash, Redding, CA, for Plaintiff.

Jeffrey E. Faucette, Skaggs Faucette LLP, San Francisco, CA, Daniel F. Katz, Pro Hac Vice, Eli Samuel Schlam, Pro Hac Vice, Janine Marie Pierson, Pro Hac Vice, Matthew William Lachman, Pro Hac Vice, Shauna M. Kramer, Pro Hac Vice, Edward Coleman Barnidge, Pro Hac Vice, Williams and Connolly LLP, Washington, DC, for Defendant.

ORDER GRANTING MOTION FOR SUMMARY JUDGMENT

Re: Dkt. Nos. 70, 71, 76, 78, 79, 83

William H. Orrick, United States District Judge

INTRODUCTION

Plaintiff Prostar Wireless Group, LLC ("Prostar") seeks to hold Domino's Pizza¹ ("Domino's") accountable for the years of work it spent developing a custom GPS driver tracking system ("the Solution") for Domino's franchisees. Prostar argues that despite a lengthy collaboration, Domino's refused to honor its side of the deal and allow Prostar to sell the finished Solution to franchisees. Instead, it relied on Prostar's work to develop an in-house system. Before me is Domino's motion for summary judgment on all ten causes of action. For the reasons set forth below, Domino's motion is GRANTED.

BACKGROUND

I. FACTUAL BACKGROUND

A. Prostar's Early Work on Driver Tracking

Prostar is a wireless services group that provides standard communication options as well as custom designed software and dynamic product development. First Amended Complaint ("FAC") [Dkt. No. 29] ¶¶ 11–13. Domino's is a pizza company with approximately 6,000 domestic and 8,000 to 9,000 international stores. Deposition of Dennis Maloney ("Maloney Depo.") [Dkt. No. 72-9] 75:20–76:12. The corporation owns about 400 domestic stores; the rest are franchises. Id. 107:3–13.

By 2007, Prostar was working to develop a driver tracking Solution to allow pizza companies to better manage delivery. Declaration of Joe Olsen ("Olsen Decl.") [Dkt. No. 77-57] ¶ 2. The Solution was not customer-facing but rather aimed at improving the efficiency of store operations. Pierson Decl. Ex. 16 [Dkt. No. 72-16], 5² (GPS Delivery Tracking information sheet); see Olsen Depo. 137:9–15 (noting that Prostar did no more than discuss a customer-facing product). In September 2007, Prostar presented an early version of its product at a Domino's Franchisee Association ("DFA") convention in Orlando, Florida and received feedback from potential franchisee customers. Olsen Decl. ¶ 2. Prostar attended additional DFA and Domino's World Wide Rally conventions in 2008, 2009, and 2010 "to market its Solution and get feedback from franchisees." Id. Through these efforts, it developed relationships with dozens of franchisees. Id. After continued development, Prostar completed and tested a prototype of the product in early 2009. Id.

B. Collaboration Between Prostar, Domino's, and IBM

In December 2010, Prostar, Domino's, and IBM³ met to discuss GPS driver tracking for Domino's.⁴ Pierson Decl. Ex. 18 (meeting invite sent by Jim Maertens of IBM); see Olsen Decl. ¶ 3 (noting that his focus beginning in late 2010 was on developing a customized driver tracking Solution for Domino's). The product Prostar planned to develop would be integrated with Domino's "Pulse" point-of-sale software system⁵ and be "released to Domino's franchisees across the United States and through much of the rest of the world." Olsen Decl. ¶ 3. Todd Bohlen, a Domino's engineer, then become involved with the goal of developing within Pulse the ability to communicate with Prostar's GPS Solution through application program interfaces ("APIs"). Bohlen Depo. 46:23–47:9. APIs are "a technical contract [through which] the two systems agree on how they are going to talk to each other." Id. 47:2–5. The parties did not share source code, but they did share other technical specifications. Olsen Decl. ¶ 11.

Joe Olsen, who at various points has been a Prostar software developer, chief technology officer, consultant, and shareholder, continued to work toward a GPS Solution with Bohlen, Domino's executives, and Domino's IT personnel. See Olsen Decl. ¶¶ 3–5; Olsen Depo. 38:10–14, 41:16–19; Nash Decl. Ex. 42 [Dkt. No. 76-35] (emails between Bohlen and Chris Demery, also of Domino's, about the Prostar Solution pilot). Olsen also worked with IBM personnel, and he "understood ... that IBM had a close relationship with all Domino's franchisees as well as Domino's largest and most influential franchisees." Olsen Decl. ¶¶ 4–5. Olsen explained the plan moving forward as follows:

So the terms were that we, [Domino's] and Prostar, develop and integrate a full Solution with parameters ... that would be integrated into Pulse, that IBM would do the sales and the marketing of the product to franchises, and that once that was completed ... we, being IBM, Prostar and Domino's, would sell driver tracking to individual franchises all across the -- across the spectrum of Domino's franchises.

Olsen Depo. 108:23–109:12; see id. 872:18–873:14 (testifying IBM would be responsible for selling Prostar's Solution).

By March 2011, Prostar had become one of IBM's approved vendors. Olsen Decl. ¶ 6. On March 11, 2011, Prostar and IBM entered into a Software and Services Engagement Agreement. Nash Decl. Ex. 4 [Dkt. No. 77-5] (agreement). Prostar did not enter into a contract with Domino's because "all the agreements were through IBM." Olsen Depo. 143:8–12. During this time, Olsen and other individuals from Prostar were in regular contact with IBM and with Domino's executives and IT personnel. Olsen Decl. ¶ 7.

C. Development, Testing, and Equivocation

Between 2011 and 2013, Prostar "devoted thousands of hours to custom software development work and related activities." Id. ¶ 8. Olsen did this work under the belief that "if [Prostar and IBM's] joint effort proved fruitful in developing and integrating the Prostar solution into the Pulse system, the solution would be made available to Domino's franchisees" for a monthly fee. Id.

In May 2012, a Domino's employee indicated to Olsen that it was "fully committed" to the Solution.⁶ Olsen Decl. ¶ 10 (internal quotation marks omitted). Another time, Domino's expressed excitement and "full support" for it. Deposition of Michael Nelson ("Nelson Depo.") [Dkt. No. 77-14] 311:8–19.

In September 2012, Domino's let Prostar and IBM know it could not make a commitment to the Solution.⁷ Pierson Decl. Ex. 25 (emails between Olsen of Prostar, Jim Maertens of IBM, and Bohlen and Wayne Pederson of Domino's). Olsen responded, "We understand – it is difficult to commit while we are both still working on the integrating/software." Id.

During one system-wide Pulse update in May 2013, Domino's released the product functionality as a pilot. Bohlen Depo. 84:6–85:10. At that point, Domino's could flip a switch and the APIs would be enabled for a store to use the Solution. Id. 83:19–84:5.

Over time, Prostar tested various versions of the Solution at Domino's franchisee locations. Id. ¶ 9. In all, it tested the Solution at approximately 15 locations. Pierson Decl. Ex. 35 (Prostar Response to Interrogatory No. 18) [Dkt. No. 72-35]. Some franchisees were unwilling to pay for the pilot and were permitted to test it for free. Pierson Decl. Ex. 34 (email from Olsen to Matthew Walls of Domino's) [Dkt. No. 72-34].

In July 2013, IBM proposed a Project Change Request ("PCR") to Domino's. Pierson Decl. Ex. 26 (emails from Maertens of IBM to Walls of Domino's) [Dkt. No. 72-26]. Domino's refused to sign the PCR. Pierson Decl. Ex. 27 (email from Walls to Maertens) [Dkt. No. 72-27]. Domino's wrote that they had previously discussed an agreement between the franchisees and IBM/Prostar, and Domino's "completely disagree[d]" with the idea of taking ownership over the Solution by signing a contract. Id.

D. Domino's Refuses to Allow Prostar and IBM to Sell the Solution to Franchisees

In February 2014, Olsen attended a meeting at Domino's headquarters in Ann Arbor, Michigan. Olsen Decl. ¶ 21. He learned that Domino's wanted to make changes to the Solution, including making it customer-facing and available for use on Android phones and iPhones. Id. ¶ 22. Olsen began to implement that work and provided Domino's weekly updates. Id.

In October 2014, Olsen reached out to Domino's because the Sprint device that Prostar had used to develop the Solution was no longer being manufactured. Pierson Decl. Ex. 36 (email from Olsen to Michael Davis of Domino's). Domino's responded that until it finished reviewing the technology, the Solution would "be in a holding pattern from a [Domino's] perspective." Id.

The Solution was ready for use on smart phones by May 2015. Olsen Decl. ¶ 22. At that same time, Domino's learned that Pizza Hut was developing a customer-facing GPS system. Pierson Decl. Ex. 42 (internal Domino's presentation on Pizza Hut's announcement that it would create a GPS delivery tracker). In July 2015, a Domino's employee visited a store that was testing Prostar's Solution, spoke with Olsen, and then invited him to Ann Arbor. Deposition of Dennis Maloney ("Maloney Depo.") 289:11–290:17, 283:16–18, 297:22–298:2. Prior to that meeting, the parties entered into a nondisclosure agreement ("NDA") that stated they were discussing "a possible business relationship." Pierson Decl. Ex. 44 (NDA).

At a July 30, 2015 meeting in Ann Abor, Olsen learned that Domino's was working to develop its own driver tracking system. Id. ¶ 26. Domino's nonetheless asked Prostar to create a rollout plan for the Solution, which it did. Id. On August 31, 2015, Domino's told Prostar that it would not be using Prostar's Solution. Id.

II. PROCEDURAL HISTORY

Prostar filed its initial complaint in San Mateo Superior Court on August 8, 2016, and Domino's removed it to this court on September 21, 2016. Dkt. Nos. 1, 1-1.

On January 6, 2017, I granted Domino's motion to...